Apple to set up R&D centre in China as sales dip

Cook also said that smartphones are growing in importance as they add new functions, and will not be replaced by other products any time soon.

“For most people, the smartphone is either the primary or the sole window that they have to the Internet… and there is nothing that eclipses it any time soon or maybe any time in the distant future,” he said.

Cook is optimistic about the world smartphone market as penetration in many markets is very low, such as India, where the 4G network is just rolling out this year.

“It’s not something you use once a month or once a week. You are gonna be using it all the time. It’s a constant companion,” he said.

The company plans to release a new iPhone model in September. Its sales in China in recent quarters have not been that favorable.

Figures show the quarterly revenue of Apple in greater China, including Hong Kong and Taiwan, dropped by 33 per cent year on year to USD 8.848 billion from April to June.

According to statistics released last month by Counterpoint Research, Apple dropped to the fifth place in China’s mobile market in the first quarter, after Huawei, Vivo, Oppo and Xiaomi, which secured 53 per cent of combined market share.

Cook responded that the company saw a significant reduction of channel inventory, particularly in the quarter from March to June, meaning customers are buying more products than the shown revenue.

Another factor that has influenced the financial figures is the depreciation of the Chinese yuan, he said.

Cook said he is optimistic about the company’s sales prospects in the fall, especially as the iOS 10 operating system will be launched.

Apple said that all 14 of its final assembly sites in China are now compliant with UL (Underwriters Laboratories) zero waste standards.

“It means that all the manufacturing waste from the 14 facilities is either reused, recycled or composted,” said Lisa Jackson, vice president of environment, policy and social initiatives at Apple.

It has a total of 18 final assembly plants in the world.

The zero waste program began in January last year and has helped divert more than 140,000 metric tons of waste from landfill to more environmentally sound procedures, she said.

The UL standards, set by a well-known US safety consulting and certification company, are widely adopted in safety-related testing and validation around the world.

“It’s the same standards that Apple uses. All the factories submitted plans to get the verification,” Jackson said.

One of Apple’s top suppliers, Foxconn saw its two sites, one in Shenzhen, southern China’s Guangdong Province, and the other in Taiyuan, northern China’s Shanxi Province, become the first to get the zero waste validation, earlier this year.

“If you visit our final assembly plants, you will see a lot of materials stacked up to be shipped back to the vendors so that they can be reused,” she said.

According to Jackson, packaging that goes back to vendors undergoes a cleaning process to get refreshed and is then
inspected to make sure it is still good enough to be used again.

In recent years, Apple has made clear efforts to improve the environmental impact of its supply chain, which is responsible for 77 per cent of its total carbon footprint.

Apple is also looking at its energy usage and today, the company announced a commitment from its major supplier Lens Technology to run its Apple operations entirely on renewable energy by 2018, state-run Xinhua news agency reported.

Lens, a company based in central China’s Hunan Province, produces cover glass, home buttons and cameras for Apple, and consumes about 500 million kilowatt hours per year, Lens CEO Zhou Qunfei said, adding that to fulfill the commitment, Lens will continue to build solar panels and purchase wind power from local companies.

Lens is the first supplier to make a clean energy commitment for all of its Apple production, which will reduce carbon dioxide emissions by nearly 450,000 metric tons per year, equivalent to the energy use of 380,000 Chinese homes, Jackson said.

Apple, which has 346 suppliers in China, has committed to partnering with Chinese suppliers to build more than two gigawatts of solar power projects by 2020, which will help cut 20 million metric tons of greenhouse gas pollution.